MortgagesFeb 26 2015

Halifax joins price war with 0.6% cuts across two-year 60% LTV

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Halifax has made cuts of up to 0.6 of a percentage point across a number of its two-year fixed rate mortgages up to 60 per cent loan-to-value.

Two-year fixed-rate products for first-time buyer and homemovers have been reduced by 0.25 of a percentage point with rates from 1.59 per cent, with a £1,995 product fee.

At the same LTV range, two-year fixed-rate products for shared equity/shared ownership for homemovers and first-time buyers have been lowered by up to 0.6 of a percentage point, with rates from 2.94 per cent with a £495 product fee.

A 0.6 percentage point reduction has also been made with loans fixed over the same time period, with rates from 3.04 per cent LTV for remortgage customers. A £495 product fee is applicable.

In early January, the bank launched a scheme offering two months interest back to eligible buyers who apply for a qualifying mortgage from the homemover and first-time buyer core product range.

In addition, the lender made cuts to all 90 per cent LTV five-year homemover, first-time buyer and remortgage products reduced by 0.20 of a percentage point, with fixed rates starting from 4.59 per cent.

At 75 per cent LTV two-year fixed-rate shared equity/shared ownership fee-free product was also lowered by 0.20 of a percentage point to 3.74 per cent.

Provider view

Craig McKinlay, mortgage director at Halifax, said: “We’ve seen a strong start to the year in terms of activity in the market; affordability remains high and competition in the market is great for borrowers.

“These latest products are some of the most competitive Halifax has had in the last 10 years and carry some of the lowest rates too.”

Adviser view

Kevin Dunn, senior partner/mortgage & protection adviser at Furnley House, based in Leicestershire, said: “There is a price war going on at the moment. When you think rates can’t get any lower they do.

“The 1.59 per cent rate is certainly a headline-grabbing figure, but in reality it will not appeal to those who are applying for a low-value mortgage because of the steep product fee.

“I can’t see Halifax doing much business with first-time buyers who would find it incredibly difficult to save for a 40 per cent deposit.”

He added: “The rates for remortgage customers, however, aren’t particular as eye-catching as the rate for first-time buyers and homemovers. With Halifax, their rates are not the most competitive, but they are quite easy to deal with.”

Verdict

Halifax has captured the zeitgeist of the mortgage marketplace by slashing its rates across a host of the mortgage product range. As competition between lenders intensifies, consumers are reaping the benefit of low interest rates, something that would have been unimaginable to many providers a decade ago. With interest rates set to rise in the spring of 2016 – later than had originally been predicted – lenders have been making cuts to their fixed-rate offerings in anticipation of clients flocking to secure a mortgage ahead of the increase in base rates.

However, the product offering the lowest rate of interest is not necessarily the best deal. Here, the headline-grabbing 1.59 per cent rate for loans up to 60 per cent LTV could appeal to those applying for a high-value mortgage because the £1,995 product fee would appear insignificant in the bigger picture.